DUBAI: Investors in Dana Gas’s $700 million Islamic bond are likely to have to repay the company a “significant” amount as a result of legal action in the UAE, the company said on Tuesday.
In a case which has unsettled the Islamic finance industry, Dana is seeking in UAE and British courts to avoid repaying its $700 million in Islamic bonds when they mature in October, arguing that the bonds have become unlawful in the UAE because of changes to Islamic financial practice.
“The final outcome of the ongoing litigation in UAE courts would likely result in a significant liability for the sukuk holders to repay the company excess ‘on account profit payments’ based on a lawful reconciliation of the matter,” Dana said.
Dana’s statement on Tuesday, published with its quarterly earnings, did not give a specific figure for the payments which it expected to receive from sukuk holders.
The Dana case has alarmed investors and banks in the Islamic finance industry because it could set a precedent for other sukuk issuers to refuse to redeem their bonds on the grounds that they are no longer Shariah-compliant.
Dana Gas had proposed a restructuring of the $700 million in bonds in which it would exchange them for new Shariah-compliant bonds. But the new bonds would offer right to profit distributions at less than half the rate of the existing bonds and would not feature any conversion into equity.
Dana Gas’s proposal caused an outcry from bond holders.
Dana has been advised by lawyers that there could be two outcomes from court proceedings in the UAE, a source close to the company said.
Under one scenario, if the UAE court decides the whole sukuk transaction needs to be unwound, Dana Gas would repay the $700 million but also claim back the “profit payments” — equivalent to coupon payments for conventional bonds — which it made on the bonds since 2008.
These total $635 million, so creditors would recover only $65 million on a net basis, the source said.
Under the other likely outcome, the UAE court would invalidate the purchase undertaking behind the sukuk, requiring the instruments to be treated as equity.
In this case, Dana would calculate its excess payments to sukuk holders at $575 million — the total profit payments on the sukuk minus actual profits of $60 million made by Dana LNG Ventures, the asset underlying the sukuk. Dana LNG Ventures is a holding company for Dana Gas Egypt.
Dana would then subtract the value of Dana Gas Egypt, which has been valued at $425 million, to obtain a figure of $150 million which sukuk holders would be asked to repay to the company, the source said.
The bondholders, represented by Deutsche Bank, are fighting Dana’s claims. A representative for the bondholders was not immediately available for comment.
The case is scheduled to be heard at London’s High Court in late September.
Last month, the High Court ordered Dana to halt the UAE legal proceedings, but the company subsequently said obtaining the stay could take months, which would allow a UAE court hearing scheduled for December to go ahead.
The case is being fought in two countries because while the purchase undertaking for the original sukuk is governed by English law, the gas production assets behind the sukuk fall under UAE law, according to the sukuk prospectus.
Dana Gas bondholders face ‘significant liability’ in UAE court case
Dana Gas bondholders face ‘significant liability’ in UAE court case
Arab Summit prepared to address key economic, social challenges in Bahrain
RIYADH: Critical economic and social challenges facing the Middle East took center stage during the preparatory meeting for the 33rd Arab Summit held in Bahrain’s capital, Manama.
The session, which took place on May 12, tackled issues that will be submitted to the upcoming summit, which is scheduled to take place for the first time in Bahrain on May 16.
Saudi Finance Minister Mohammed Al-Jadaan headed the Kingdom’s delegation to the ministerial meeting, which included representatives of member states of the League of Arab States and a number of specialists from its general secretariat.
Al-Jadaan affirmed Saudi Arabia’s pride in hosting the 32nd Regular Session of the Arab Summit, which concluded with the issuance of the Jeddah Declaration, which encompasses numerous initiatives aimed at enhancing collective efforts across economic, agricultural, cultural, and educational domains.
Saudi Arabia’s Asir region partners with Almosafer to boost tourism potential
RIYADH: Saudi Arabia’s Asir region is edging closer to becoming a premier global tourism destination, thanks to a new partnership with fellow Kingdom-based travel company Almosafer.
Signed with the area’s development authority, the memorandum of understanding aims to leverage the firm’s expertise and diverse range of travel services across its business verticals to drive tourism in the region and curate inspired experiences for visitors, according to a statement.
This move falls in line with both parties’ goal to establish Asir, situated along the Red Sea coast, as a year-round tourism destination for local and global visitors alike.
“Our partnership with Almosafer comes at a significant moment as we are accelerating efforts to enhance the Asir region’s visibility and appeal to domestic and international travelers as a year-round-destination,” said Hashim Al-Dabbagh, acting CEO of Asir Development Authority.
He added: “Through comprehensive training, collaborative marketing, and the integration of Asir’s activities and offerings onto Almosafer’s digital platforms, we aim to showcase the region’s exceptional offerings to the wider world.”
Moreover, Almosafer’s geographical reach and experience in the Kingdom will be pivotal in introducing regional and global tourists to the region.
IFC investments in Egypt near $9bn, says minister
RIYADH: Egypt is emerging as a pivotal player for the International Finance Corp., with investments nearing $9 billion, announced a top minister.
Inaugurating the “IFC Day in Egypt” event, Minister of International Cooperation Rania Al-Mashat underscored that this substantial influx of capital underscores the nation’s stature as one of the foremost countries of operations for the organization within the broader framework of collaboration with the World Bank, a release highlighted.
From July 2023 to May 2024, Egypt witnessed a notable infusion of $900 million in investments from the IFC, marking a testament to the sustained momentum of financial inflows into the country’s economic landscape.
Al-Mashat further declared that in adherence with the directives of President Abdel Fattah El-Sisi, Egypt remains steadfast in its commitment to bolstering the private sector as a driving force in advancing development endeavors.
Middle Eastern airports embrace sustainability and tech amidst rising passenger expectations
RIYADH: Middle Eastern airports are prioritizing sustainability, eco-friendly infrastructure and renewable energy to combat climate challenges, a recent study showed.
In its latest report, Bain & Co., a management consulting firm, also underscored the rising demand for seamless and personalized travel experiences driven by evolving passenger expectations.
To address this, regional airports are also heavily investing in digital solutions that offer real-time communication and integrated mobility platforms.
Discussing the growing emphasis on sustainability initiatives among the region’s airports, Akram Alami, Middle East head of utilities, aviation, and sustainability & responsibility practices at Bain & Co., said: “They aim to reduce their environmental impact through efforts like achieving carbon-neutral certification, designing eco-friendly infrastructure, and adopting renewable energy.”
He added: “These initiatives are part of a broader strategy to address climate change and meet passenger expectations for more sustainable travel options.”
The report also highlighted that airports in the region face several obstacles while implementing these sustainable practices, including high expenses for renewable technologies and regulatory issues.
“Key challenges include high initial costs for green technologies, regulatory constraints, and the need for stakeholder alignment. Technological limitations and the need to integrate sustainability into existing infrastructure without disrupting operations also pose significant challenges,” noted Ilya Yamshchikov, associate partner at Bain & Co. Middle East.
The report stated that other factors driving the growth of airports in the region include the adoption of technology and the commitment to meeting passenger expectations.
Moreover, digital biometric screening and contactless services are streamlining security and boarding processes, it added.
The US-based firm further pointed out that airports are also leveraging technologies like computed tomography baggage scanners and body scanners to expedite security checks without compromising safety.
“These trends are expected to continue shaping the development of airports, leading to more efficient and passenger-centric facilities. They will significantly transform airline operations and the overall travel experience, making air travel more accessible, enjoyable and sustainable for future generations,” said Mauro Anastasi, partner and a member of the Aviation practice at Bain & Co.
In December 2023, Saudi Arabia’s Riyadh Airports Co. partnered with Cognizant to bolster its digital capabilities in finance, human resources, procurement, and planning, with the goal of enhancing traveler experience.
Moreover, in November 2023, Abdulaziz Al-Duailej, president of Saudi Arabia’s General Authority of Civil Aviation, stated that the Kingdom is working to finalize a comprehensive systematic plan to address environmental sustainability in the aviation sector.
In terms of passenger expectations, a report released by GACA in April revealed that all airports in Saudi Arabia that received passenger complaints in March resolved them on time.
Saudi Arabia leads GCC IPO market with 594% surge in proceeds: Markaz
RIYADH: Saudi Arabia led the Gulf Cooperation Council initial public offering market with an annual 594 percent surge in the first quarter of 2024, according to Kuwait Financial Centre.
A report issued by the organization, commonly known as Markaz, detailed the dynamic landscape of IPO activities across the GCC region, revealing significant shifts and trends in investment flows.
The report highlighted that Saudi Arabia has demonstrated considerable growth, raising a total of $503 million from eight offerings.
Despite the Kingdom’s activity, the overall GCC region witnessed a downturn in IPO activity in terms of value, with total proceeds amounting to $931 million through nine offerings in the first three months of 2024 – a 73 percent year-on-year decline.
The same period of 2023 saw issuers raise $3.5 billion through 12 offerings.
For the first quarter of 2024, Saudi Arabia capturing 54 percent of the total proceeds in the GCC, while the UAE accounted for the remaining 46 percent, which came from just one offering – signaling an 87 percent decrease compared to the same period last year.
Other countries in the group did not witness any new listings activity during this quarter.
On a sectoral basis, transportation emerged as the frontrunner, driven by Dubai-based Parkin Co.’s offering, which raised $429 million, constituting nearly 46 percent of total GCC IPO proceeds during the period.
Additionally, Saudi Modern Mills Co.’s listing in the food and beverage sector garnered over $314 million, contributing 34 percent to the total proceeds.
Following these were IPOs from the pharmaceutical, healthcare equipment, and materials sectors, accounting for 14 percent, 2 percent, and 1 percent, respectively.
Exchange-wise, $445 million came from listings on the Kingdom’s Main Market, with $57 million on the Nomu-Parallel Market.
Meanwhile, the UAE markets accounted for the remaining 46 percent, with $429 million listed on Dubai’s exchange, showcasing the vibrancy of both countries’ capital markets.
